The long tail of loyalty: how personalized dialogue and customized rewards will change marketing forever

Abstract

Purpose

This paper is aimed at describing how companies can find new opportunities for customer retention and lifetime value by applying the concepts of dialogue marketing, network‐building and relevant rewards.

Design/methodology/approach

The paper cites the work of Chris Anderson, Editor‐in‐Chief of Wired Magazine, and the work of Italian economist Vilfredo Pareto. The paper explains how the works of these two men, and how programs put into place at two companies (Hewlett‐Packard and Rain Bird), have opened new vistas in customer retention.

Findings

The study found that by applying specific marketing principles, companies can do a better job of retaining all customers, specifically those customers who are not in the top 20 percent of revenue‐producers.

Practical implications

Most companies believe that 80 percent of their business comes from 20 percent of their customers. However, by applying specific marketing principles, companies can do a better job of retaining all customers, specifically those customers who are not in the top 20 percent of revenue‐producers.

Originality/value

The paper takes a new look at an old principle (the 80‐20 Pareto Principle).

Citation

Ferguson, R. and Hlavinka, K. (2006), "The long tail of loyalty: how personalized dialogue and customized rewards will change marketing forever", Journal of Consumer Marketing, Vol. 23 No. 6, pp. 357-361. https://doi.org/10.1108/07363760610701904